Bonds Refusing to Follow the Script

One of the strongest things a market can do is rally on bearish news. Not all of the news this week has been bearish for debt futures, but there has been plenty to keep advances in June T-bonds (USM3:CBOT) and 10-year notes (TYM3:CBOT) in check. Still, these contracts have shaken off the negativity and traded to within one point of their contract highs.

Debt futures shrugged at Tuesday's double whammy of bearish reports for bonds. First, the Labor Department said first-quarter employment costs doubled from the previous quarter, advancing at their fastest pace since 1990. Skyrocketing health insurance accounted for much of the increase, but wage pressure also contributed. ...